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Introducing the Procurement Process

<div id="content"><p tabindex="0">Procurement is the process of acquiring goods or services from external sources. ​</p><p tabindex="0">In a business-to-business (B2B) environment, procurement involves the interaction between buyers and suppliers. Procurement can be ​divided into two primary categories: Direct and Indirect.</p><p tabindex="0">Direct procurement refers to the purchasing of raw materials, components, and finished products that are directly related to the core business activities and the production of goods and services. For example: A car manufacturer purchases steel, tires, engines, and other parts from various suppliers to assemble their vehicles. ​</p><p tabindex="0">​Indirect procurement encompasses the purchase of goods and services that are not directly linked to the core business activities. These goods and services are vital for the smooth functioning and upkeep of the organization. These may include items like office supplies, utilities, travel arrangements, and IT services. For example: A car manufacturer purchases office furniture, stationery, cleaning services, and catering services for their employees and offices.</p><p tabindex="0">Play the video to learn about the main steps in the procurement process.</p><div class="kalturaVideoLessonWrapper"><div aria-label="" class="kalturaVideoLessonContainer" data-testid="video" id="1_1rffirjm"></div></div></div>

Procurement Process Overview

Introducing Procurement Processes

<div>Explore the comprehensive procurement process overview, encompassing steps from requisition to payment for seamless transactions. Enhance operational efficiency and supplier relationships with this insightful journey.<br><br># This description was auto-generated #</div>

Overviewing the Procurement Process.mp4

Welcome to our journey on the procurement process overview. It consists of various steps, from purchase requisition to payment, ensuring seamless and efficient transactions. The procurement process starts with the submission of a purchase requisition. An employee identifies a need and creates this requisition, choosing an item from the catalog or an existing contract. This ensures accuracy and compliance with corporate guidelines. Additionally, there is the possibility of raising a requisition for non-catalog items. Next, the requisition moves to the approval stage. An approver reviews and authorizes the requisition, transforming it into a purchase order. This is an internal document now ready to be sent to the supplier. At this juncture, the requester has the flexibility to amend the purchase order if necessary, accommodating any last-minute adjustments. Following this, the purchase order acknowledgement phase begins. The supplier confirms receipt of the purchase order and verifies their ability to fulfill it, considering any changes made. With confirmation in place, the supplier then ships the item and sends an advance ship notice to the requester, ensuring transparent shipment details. Additionally, the supplier sends an invoice to the Accounts Payable department. The requester receives the goods, verifies them,  and the invoice is processed by the Accounts Payable and Accounts Receivable departments. This ensures meticulous handling of financial transactions, maintaining accuracy. Finally, the payment phase concludes the procurement cycle. The Accounts Payable team processes the check and sends the payment to the supplier, completing the entire procurement process from requisition to payment. In summary, the streamlined procurement process enhances operational efficiency and solid supplier relationships, ensuring smooth and effective business operations. Thank you for joining us on this journey.